Dislocation = Opportunity In Enbridge Preferred Shares
Keubiko • 36 Comments
Keubiko • 36 Comments
Thu, May 5, 6:38 PM
- Alberta's raging wildfire has caused Canadian crude oil output to drop by at least 475K bbl/day, or nearly 20% of Canada's 2.5M barrels in total oil sands production - much of it typically sent to U.S. refineries.
- While no oil operations have sustained damage from the fires, many operators have cut output amid evacuations of non-essential staff, pipeline outages and the risk from encroaching fire.
- The amount of daily oil production threatened by the Canadian fires would be enough to nearly wipe out the world's oversupply, says Tim Pickering of Auspice Capital Advisors, calling the blaze "the most important issue in oil today."
- The Bank of Nova Scotia says the destruction of property and loss of production could mean "very little" GDP growth during Q2 for the overall Canadian economy and that the damage to infrastructure will slow the recovery in the country's oil patch.
- In the latest of a series of plant closures, ConocoPhillips (NYSE:COP) today shut down its Surmont oil sands site that produces 50K bbl/day and evacuated all staff, and Suncor (NYSE:SU) cut output at its 350K bbl/day Syncrude mining operation and its 203K bbl/day Firebag well site without specifying how much.
- Other relevant tickers include: RDS.A, RDS.B, IMO, XOM, CNQ, ENB, PBA, CEO, OTCPK:HUSKF, OTCPK:IPPLF.
- ETFs: USO, OIL, UWTI, UCO, DWTI, SCO, BNO, DBO, DTO, USL, DNO, OLO, SZO, OLEM
Wed, May 4, 11:18 PM
- The huge wildfire (I, II) that already has forced more than 80K people to flee their homes in and around Fort McMurray and disrupted oil sands operations in Alberta reportedly is set to expand.
- Wildfire officials say the blaze probably will grow to 100 sq. km (40 sq. miles) from ~80 now, and that although lower temperatures may aid firefighters tomorrow, the fire is expected to last at least until the weekend.
- WTI crude oil prices have jumped past $45/bbl overnight as the fire disrupts oil sands production.
- Alberta oil sands producers are not yet in the fire's path but have cut or halted operations because of evacuations: Royal Dutch Shell’s (RDS.A, RDS.B) Canadian unit shut its Albian Sands mining operations which produce ~255K bbl/day, Suncor (NYSE:SU) cut production at all of its oil sands sites, Inter Pipeline (OTCPK:IPPLF) partially closed its 540K bbl/day Polaris pipeline system and its 346K bbl/day Corridor system, Husky Energy (OTCPK:HUSKF) cut output at its Sunrise oil sands plant by two-thirds to 10K bbl/day, Exxon’s (NYSE:XOM) Imperial Oil (NYSEMKT:IMO) Canadian unit says production has not yet been affected, and operations by Enbridge (NYSE:ENB), Pembina Pipeline (NYSE:PBA) and Canadian Natural Resources (NYSE:CNQ) apparently have not been affected.
- The inferno is shaping up to be worse than the Slave Lake fire of 2011, one of the most costly natural disasters in Canada’s history, and is a severe blow to an area already devastated by job losses stemming from low energy prices.
Mon, Apr. 25, 4:49 PM
- Canada's National Energy Board recommends approval of Enbridge’s (NYSE:ENB) application to expand oil shipping capacity on its Line 3 pipeline between Alberta and Wisconsin to 760K bbl/day from 390K bbl/day, but imposes 89 conditions designed to enhance safety and environmental protection.
- The federal government now has three months to OK the ~$7.5B project, although the deadline could be extended; ENB hopes the new Line 3, built next to the existing Line 3, will be in operation by 2019.
- Line 3 is one of six arteries that make up ENB’s Canadian mainline, which moves Alberta crude eastward, but the pipeline is nearly a half-century old and has suffered several ruptures over the years.
- Now read Enbridge's Northern Gateway may get second chance as Trudeau wavers
Mon, Apr. 25, 2:57 PM
- Enbridge’s (ENB -1.6%) Northern Gateway pipeline may get renewed life as the Canadian government wavers on a planned tanker moratorium that had been thought to spell the end for the project, Bloomberg reports.
- PM Trudeau pledged in November to enact a tanker moratorium off the northern British Columbia coast, which was interpreted at the time to sound the death knell for the pipeline, but cabinet ministers are non-committal on the precise implications while federals officials have regularly declined comment on the project's prospects.
- Alberta Premier Notley says she met with Trudeau Sunday night about “the importance of getting a pipeline built so we can get Alberta’s energy product to market."
- Now read Enbridge: The short story
Fri, Apr. 22, 5:21 PM
Thu, Apr. 21, 6:17 PM
- Alberta's provincial government releases technical formulas for its new oil and gas royalty framework, a move welcomed by the energy industry as providing clarity to potential investors and enabling producers to move forward with drilling and investment plans.
- Analysts say the technical formulas are a net positive for producers by basing well cost allowances on the 2012-15 period when costs were higher, but oil prices - and whether they recover or continue to languish near $40/bbl - would have a much greater impact on investment decisions in Alberta than the royalty structure.
- Alberta's new NDP government unveiled its new royalty framework in January which left rates largely unchanged on oil sands projects and existing wells.
- Relevant tickers: SU, CVE, OTCPK:HUSKF, RDS.A, RDS.B, IMO, XOM, CNQ, ENB, TRP, PDS, OTCPK:MEGEF
- Now read Which Canadian mid-cap pipelines pay out safe dividends?
Mon, Apr. 18, 10:25 AM
- The energy sector (XLE +0.1%) pokes into the green as crude oil prices pare earlier losses even after the collapse of the Doha meeting, and it's a mixed bag among the top global oil companies in early trading: XOM +0.1%, CVX +0.3%, RDS.A -0.9%, BP -0.3%, TOT -0.4%.
- Kuwait may have achieved what Doha failed to do, at least in the short term, as a labor strike that began Sunday has cut the country's production by 60%, shuttering 1.7M bbl/day, slightly more than H1's global surplus that caused prices drop to a 12-year low in January.
- Some oil analysts say the lack of a Doha deal is better for oil prices in the long run now that the rebalancing process of supply and demand can continue to its natural conclusion.
- Other noteworthy names: KMI -0.1%, CHK -4%, MRO -1.4%, COP +0.1%, SLB +0.2%, HAL +0.2%, BHI -0.7%, OXY +0.5%, APC -0.1%, HES +0.6%, ENB +0.8%, ETP -0.4%, EPD +1.5%.
- ETFs: XLE, VDE, ERX, OIH, XOP, FCG, ERY, GASL, DIG, DUG, BGR, XES, IYE, IEO, FENY, IEZ, PXE, PXI, FIF, PXJ, RYE, NDP, GUSH, PSCE, DRIP, DDG, FXN
- Now read No deal! Our 'enfant terrible' Saudi Arabia did it again
Thu, Apr. 7, 5:46 PM
- Spending in Canada’s oil and natural gas sector has fallen by a record C$50B (US$38B) over the past two years, a 62% drop that marks the biggest two-year decline since 1947 when data was first collected, according to the Canadian Association of Petroleum Producers.
- The group predicts total capital investment in the oil and natural gas sector will fall to C$31B in 2016, down from C$48B in 2015 and a record C$81B in 2014.
- CAPP also forecasts that the total number of wells drilled in Canada’s western provinces, home to the world's third largest oil reserves, will fall to 3,500 in 2016 from 10,400 drilled in 2014 and that capital spending there will drop to $17B this year, about half of 2014 levels.
- Relevant tickers: SU, CVE, IMO, XOM, RDS.A, RDS.B, CNQ, ENB, TRP, PDS, OTCPK:HUSKF, OTCQX:COSWF, OTCPK:MEGEF
- Now read Canada's biggest oil producers sitting on near-record cash pile
Tue, Mar. 8, 5:17 PM
- A U.S. bankruptcy judge says Sabine Oil & Gas (OTCPK:SOGCQ) can reject contracts with midstream companies it made before oil and gas prices plunged.
- But the judge says her ruling is not binding, potentially setting the stage for another legal battle over the pipeline operators' argument that the agreements cannot be broken because they are inextricably tied to the land on which Sabine operates.
- The ruling covers agreements with two companies, including an affiliate of Cheniere Energy (NYSEMKT:LNG), that gather natural gas for Sabine in specific geographic locations; Sabine has said that rejecting the contracts could save as much as $115M for the bankruptcy estate.
- Restructuring and energy experts have warned that a loss for Sabine's pipeline operators could inspire other bankrupt oil and gas producers to seek similar relief, spreading the distress that has plagued them to the midstream companies that process and transport oil and natural gas.
- Similar requests are pending in the chapter 11 cases of companies including Quicksilver Resources (OTCPK:KWKAQ) and Magnum Hunter Resources (OTCPK:MHRCQ); a Delaware judge is expected to rule on KWK's request by the end of the month.
- Pipeline stocks include: KMI, ENB, EEP, SE, SEP, WMB, ETE, ETP, OKS, PAA, PBA, MMP, CQP, BWP, BPL, WES, SXL, NS, NSH, TCP, NGL, DPM, GEL, HEP, APL, SEMG, TLLP, MMLP, TLP, SGU, BKEP
Tue, Mar. 1, 9:51 AM
- Marathon Oil (MRO -6.3%) opens sharply lower after upsizing its public offering to 145M common shares and pricing it at $7.65/share; MRO's original offering had totaled 135M shares.
- MRO says it intends to use the proceeds to strengthen its balance sheet and fund part of its capital program.
- While the offering represents a 20% dilution to MRO shareholders, it is a far better choice than adding to its $7.3B long-term debt load, according to TheStreet.com's Jim Collins.
- Energy companies have issued nearly $11B in equity YTD, with MRO just the latest to issue equity within the past two weeks following Devon Energy (DVN -3.6%), Enbridge (ENB -1%) and Newfield Exploration (NFX -0.9%).
Wed, Feb. 24, 5:59 PM
- Enbridge (NYSE:ENB) -6.2% AH after announcing plans to issue 49.14M common shares on a bought deal basis, raising ~C$2B (US$1.5B) in Canada and the U.S., with an underwriters option to purchase up to an additional 7.37M shares.
- ENB says it plans to use the proceeds to pay down short-term debt pending investment in capital projects, and expects the equity raised will be sufficient to fulfill equity funding requirements for its growth program through the end of 2017.
Fri, Feb. 19, 6:54 PM
- Enbridge (NYSE:ENB) says it is looking for ways to reduce its dependence on oil sands growth, as the crude price collapse casts doubt over the future of projects in western Canada.
- Guy Jarvis, the head of ENB’s pipeline operations, said during today's earnings conference call that the company would shift its focus after the current wave of projects draws to a close near the end of the decade, adding that ENB also would look at power generation and energy services as areas for growth.
- ENB has escaped much of the impact of the market rout that has hurt its customers, helped by long-term shipping contracts, increasing volumes as current oil sands projects are completed, and little direct exposure to crude pricing.
- Q4 earnings beat expectations even as ENB said it would defer spending C$5B of a planned C$18B earmarked for new projects over the next three years.
- CEO Al Monaco said during the call that ENB is unlikely to begin construction on its proposed Northern Gateway oil pipeline to Canada’s Pacific coast by a year-end deadline, and may ask Canadian regulators for an extension in the timeline for the project.
Fri, Feb. 19, 11:54 AM
- Enbridge (ENB -2.1%) is lower as part of today's broad energy rout, even after reporting better than expected Q4 earnings as record oil shipments on its main pipeline system shielded the company from the collapse in prices.
- ENB's Mainline system, which moves most of Canada's crude exports to the U.S., shipped an average of 2.2M bbl/day of oil during Q4, compared with 2.1M a year earlier.
- ENB says it will defer C$5B in capex planned for this year and the next to 2018, as the Sandpiper and Line 3 replacement pipeline projects to Wisconsin are delayed to 2019 from 2017 to allow for completion of environmental reviews and permitting in Minnesota.
- ENB also says the secured component of its 2015-19 growth capital program totals C$26B, of which ~$8B already has been funded and brought into service through the end of 2015.
Fri, Feb. 19, 7:04 AM
Wed, Feb. 17, 4:54 PM
- Enbridge Energy Partners (NYSE:EEP) powered off heavy early losses in response to below consensus Q4 results to close regular trading 1.2% higher, after saying that delays of two pipelines will help it cut its 2016 capital budget by ~20%.
- EEP says the Sandpiper Pipeline and Line 3 Replacement project likely will be pushed back until 2019, meaning it can defer some of the costs required to build the lines and cut 2016 capex to $900M from the $1.14B spent in 2015.
- EEP also says it is willing to allow parent company Enbridge (NYSE:ENB) to fund a larger share of the Line 3 Replacement in exchange for a greater interest in the completed pipeline.
- Sandpiper is a joint venture between EEP and Marathon Petroleum that would carry light oil from North Dakota’s Bakken to an existing Wisconsin pipeline hub, where the crude could connect to other markets; the Line 3 project will re-lay a pipeline running from Alberta to Superior, Wis., allowing EEP to nearly double capacity to 760K bbl/day.
Wed, Feb. 10, 3:57 PM
- Summit Midstream Partners (SMLP -0.9%) says it has begun operations of the Stampede Lateral crude oil transmission pipeline in North Dakota and is in the final stages of completing the nearby Little Muddy crude oil transmission pipeline.
- SMLP says the Stampede Lateral connects its Polar & Divide crude oil gathering system with Global Partners' (GLP -3.2%) Basin Transload rail terminal, and provides GLP and other producers in the region with up to 60K bbl/day of crude oil throughput capacity.
- Little Muddy will interconnect with Enbridge's (ENB -2.1%) pipeline system in the Bakken shale formation.
Enbridge, Inc. transports, generates and distributes energy in Canada and U.S. The company is involved in natural gas transmission and midstream businesses. It operates through five business segments: Liquids Pipelines, Gas Distribution, Gas Pipelines, Processing and Energy Services, Sponsored... More
Sector: Basic Materials
Industry: Oil & Gas Pipelines
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